If you currently feel like you waded way in over your head in debt, bankruptcy may start looking like an attractive option. Bankruptcy may certainly help to resolve some financial problems, but it does not tackle the underlying issue of debt management.

One popular solution aimed at debt management is the snowball method. Finance gurus and consumers alike praise this as an excellent way to pay off debt, but does it actually work?

What is the snowball method?

The snowball method involves starting with your smallest debt, paying it off and moving to the next one. This helps you build confidence and gain momentum over time. These four easy steps from Credit Karma may simplify the process for you:

  1. Sort all of your debts into a list with the smallest to largest balances.
  2. Each month, make only the minimum payments on everything but the current smallest debt.
  3. After repaying the smallest debt, use the money usually paid toward that to pay off the next smallest debt.
  4. Continue to pay off the smallest to largest debts until you have no more debts.

Does it work?

You will find no shortage of people claiming the snowball method works for them, but many financial professionals speak out against it. Instead, they recommend paying off the balances with the highest APR first, so you can save money. Otherwise, you end up paying more money over time in interest. However, for some people, without the snowball method, they might never build the confidence to complete the process.

Unfortunately, the snowball method may not work for all cases, such as when someone becomes legitimately overwhelmed. In these cases, only renegotiations, settlements or bankruptcy may help.